Sugar rises as Brazilian real strengthens, harvest delays

General Comments: Futures were higher as the Brazilian real strengthened against the U.S. dollar and as traders talked of Brazil harvest delays from recent rains. Scattered showers are now reported in production areas of Brazil, but dry weather should return this weekend. Heavier rains seen in the last few weeks could have hurt sugar yields, but yields could get a little better now with the return of drier weather. India should still have more than enough production to allow for exports. However, a cyclone is entering the country last weekend and could hurt crops. The rupee has been working lower. There is talk of strong offers from Thailand, and Thai differentials are stable. Price action suggests that the rally is starting to stall, but nearby New York contracts could approach 1950 and strong resistance just above that level before finding much new selling interest from producers.

Overnight News: Brazil could see showers and near to above normal temperatures this week and dry conditions with variable temperatures this weekend. .

Chart Trends: Trends in New York are mixed to up with objectives of 1940 and 1950 March. Support is at 1860, 1845, and 1835 March, and resistance is at 1915, 1935, and 1950 March. Trends in London are up with objectives of 511.00, 513.00, and 534.00 December. Support is at 499.00, 493.00, and 487.00 December, and resistance is at 510.00, 515.00, and 517.00 December.

General Comments: Futures closed a little lower in consolidation trading. Trading has been quiet as the harvest continues to move forward and as traders search for news. Bullish traders got no help yesterday when the Chinese Cotton Association showed significantly less demand last month tan had been seen for much of the year. The lack of USDA reports has greatly reduced volume as traders do not know exactly what is going on. India is quiet due to a holiday this week. Brazil conditions are reported to be very good in Bahia. US crop conditions right now are generally good in Texas. The Delta and Southeast are reporting generally favorable conditions as well. Trends turned down on the charts with the price action this week.

Overnight News: The Delta will be dry and Southeast will see showers today, then mostly dry weather. Temperatures will average near to above normal. Texas will see light showers Friday, otherwise dry weather. Temperatures will average near to below normal. The USDA spot price is not available today. ICE said that certified Cotton stocks are now 0.048 million bales, from 0.38 million yesterday.

Chart Trends: Trends in Cotton are mixed to down with no objectives. Support is at 82.90, 82.50, and 81.70 December, with resistance of 84.20, 85.50, and 85.80 December.

About the Author

Jack Scovilleis a veteran futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar. His industry contacts in South America, Europe, Asia, and North America provide him with a unique and comprehensive view of these markets. Jack began working in the futures industry over 30 years ago and spent 10 years working on the floor of the Chicago Board of Trade in various roles, starting with The PRICE Futures Group since it was established in 1988. Jack writes daily commentaries - Morning Grains and Softs, in both English and Spanish and is regularly quoted around the world by news & wire services including Dow Jones, AP, Bloomberg, and Reuters. You can contact Jack by phone at (312) 264-4322 or by email at jscoville@pricegroup.com. Learn even more on our website at www.pricegroup.com.

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